Supplier Selection Optimization to Enhance Procurement Strategies in Power Generation Operation and Maintenance Service

Abstract

In today's society, electricity is a necessity that cannot be ignored. To ensure its availability and reliability, regular maintenance and efficient material management in power plants are essential. Material costs significantly impact operational costs, making expenditure control strategies extremely crucial. In supplier selection, organizations often overlook important factors beyond cost and risk. Rezaei proposes to combine the purchasing portfolio matrix with the supplier potential matrix, a method that has been tested in various sectors but has not been widely explored in operation and maintenance (O&M) services. To address this gap, this article presents a comprehensive framework that integrates resource-based view and transaction cost economics theories. Conducted through a case study of an O&M services company in Indonesia, the main objective is to improve the understanding of supplier selection in power plant O&M, enrich the method, and make a significant contribution to the field empirically. The application of the method improved efficiency by reducing warehouse inventory balances by an average of 10% per year, reducing workplace accidents, lowering the carbon footprint, and increasing customer satisfaction scores by 5% in terms of spare parts/material availability.